Tesco has announced plans to repay the £585 million business rate bailout it received during the pandemic.
The UK’s biggest supermarket revealed news that it would do so following the pressure on supermarkets. UK supermarkets have been criticized for not requiring financial support as sales boosted and profits increased.
Recent results at supermarkets showed that Tesco reports a 29% increase in pre-tax profit, allowing the group to pay dividends.
“For food retailers, the impact was immediate and potentially disastrous. The risk of panic purchases, serious pressure on supply lines, major safety concerns and the massive absences from work reached a real immediate risk to supermarkets’ ability to nourish the country,” the supermarket said in a statement.
“Every penny of interest relief we received has been spent in response to the pandemic. The latest estimate in the interim results for October was that Covid would cost TescoC this year, £725 million.
“Ten months after the pandemic, our business has proven to be resilient in the most challenging situations. All businesses are affected, but many are significant, but we serve millions of customers every day and uncertainty still exists, but some of the potential risks we face earlier this year are now behind us. We are absolutely committed to doing the right thing by our customers, our colleagues and all our stakeholders.
“Therefore, we are announcing that we will make the relief of fully received business rates to the public. We will work with the UK government and the mandate government on the best possible means to do so.”
Tesco is the first of the major supermarkets to announce the move and retrieve government support.
“This gesture costs quite a lot of money, so it cannot be dismissed without meaning. It’s possible that the boardroom of the peer group is cursing the movement. After all, unlike Tesco, if they follow suit, they won’t be able to claim brownie points to go first,” explained stockbroker Aji Bell’s Las Kabi.
“Previously, grocery stores had argued that they were entitled to use this tax credit despite being able to operate throughout the pandemic due to all the extra costs they incurred and the pressure they faced in feeding the country. Tesco would argue that today’s decision is not a reflection of a change of mind, but a story of a change in situation when the background is stable,” he added.
Tesco’s shares are trading -1.62% at 225,20 (1149GMT).
